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Gold has a recognition as an store of value based on its network effects while Bitcoin network effect is pretty low in comparison. Not sure I understand why yo

Gold has a recognition as an store of value based on its network effects while Bitcoin network effect is pretty low in comparison. Not sure I understand why you believe Bitcoin's network effects are lower than golds. The more people willing to accept a unit of Bitcoin, the more useful Bitcoin becomes. Also, gold's store of value power is also attributed from its stock to flow ratio (the difficulty of inflating gold supply). Bitcoin has an even better stock to flow ratio, which is why its often compared to gold.

wslh 6y ago
> Not sure I understand why you believe Bitcoin's network effects are lower than golds. The more people willing to accept a unit of Bitcoin, the more useful Bitcoin becomes. Gold is more connected to the regulated financial world than Bitcoin. The network effect is not only about user base but interrelation with other systems. Not saying that Bitcoin could not have a bigger place but it is not there yet.
- coralreef 6y ago
  I see, you're saying gold is basically more established in the current financial system. It might just be semantics, but when you say gold has stronger network effects than bitcoin, I'm imagining that an additional user provides X value to the gold system, but an additional bitcoin user only adds X-1 value to bitcoin. Which I believe isn't true, both networks probably follow the same marginal utility curves.
  - wslh 6y ago
    Tether (USDT) has more volume than Bitcoin which could mean that the network effect ironically turns to stable coins connected to fiat money taking advantage of permissionless protocols and not caring about the native assets like Bitcoin or Ethereum.
    - coralreef 6y ago
      Stable coins like Tether are mostly used by large exchanges for liquidity purposes. Retail users rarely use USDT to buy/sell goods or exchange with one another. It is also not really permissionless because you need to register with the administrators of USDT and wire a bank transfer if you ever want to convert your USDT to USD. All fiat backed stablecoins have this inherent flaw of having an intermediary party to "parent" transactions. An example of this is Tether banlisting addresses of suspected stolen coins.

wslh 6y ago

> Not sure I understand why you believe Bitcoin's network effects are lower than golds. The more people willing to accept a unit of Bitcoin, the more useful Bitcoin becomes. Gold is more connected to the regulated financial world than Bitcoin. The network effect is not only about user base but interrelation with other systems. Not saying that Bitcoin could not have a bigger place but it is not there yet.

coralreef 6y ago
I see, you're saying gold is basically more established in the current financial system. It might just be semantics, but when you say gold has stronger network effects than bitcoin, I'm imagining that an additional user provides X value to the gold system, but an additional bitcoin user only adds X-1 value to bitcoin. Which I believe isn't true, both networks probably follow the same marginal utility curves.
- wslh 6y ago
  Tether (USDT) has more volume than Bitcoin which could mean that the network effect ironically turns to stable coins connected to fiat money taking advantage of permissionless protocols and not caring about the native assets like Bitcoin or Ethereum.
  - coralreef 6y ago
    Stable coins like Tether are mostly used by large exchanges for liquidity purposes. Retail users rarely use USDT to buy/sell goods or exchange with one another. It is also not really permissionless because you need to register with the administrators of USDT and wire a bank transfer if you ever want to convert your USDT to USD. All fiat backed stablecoins have this inherent flaw of having an intermediary party to "parent" transactions. An example of this is Tether banlisting addresses of suspected stolen coins.